Asia Stocks recap: Tokyo\’s kind of a drag

May 14, 2014, 7:59 PM ET

Reuters

Welcome to the Asia Stocks live blog, a running account of what the region’s share markets are doing, along with other news. Today, Japan stocks fall on a strengthening yen and Sony\’s projection for another loss in the current fiscal year, but Hong Kong rising toward a sixth straight day of gains.

Judging by the just-released Japanese GDP figures, the first three months of the year was a boom time for the economy. Seasonally adjusted real gross domestic product surges 5.9% higher on an annualized basis, blowing away the 0.1% gain in the last quarter of 2013.

While the market has yet to open, Nikkei Average futures pared their losses in electronic trade in Singapore to a 0.7% loss, down from a 1% deficit ahead of the numbers. The yen, however, held its ground, with the dollar buying ¥101.81.

Helping drive the powerful expansion was private consumption, which surged an annualized 8.5%. However, this was likely more a reflection of Japanese consumers rushing to buy stuff ahead of the April 1 consumption-tax hike, so economists are expecting a weak reading for the current quarter.

Japanese equities are taking a beating in early action, with the Nikkei Average and Topix each down 1.4%.

Specifically, the market is getting no help from better-than-expected GDP numbers, but instead focusing a downbeat outlook from Sony and a rising yen (dollar at ¥101.80 vs. ¥102.24 a day earlier), not to mention losses on Wall Street overnight.

Then again, it seems like even relatively solid earnings aren’t enough to goose stock prices this morning. Rising profit at the three so-called “Megabanks” is unable to help their shares, with Mitsubishi UFJ down 1.1%, Mizuho Financial down 1%, and Sumitomo Mitsui Financial Group down a whopping 4%.

The Megabanks’ problem may be that a large chunk of those profits came courtesy of a strong stock market, something which could be absent from Tokyo in the near term. A Wall Street Journal report quotes Sumitomo Mitsui President Koichi Miyata as saying: “We took a chance in our trading activities, generating gains from equity holdings, but we can’t expect it to be sustainable.”

Despite the weak tone to this morning’s market, however, some blue chips are enjoying solid gains.

Sharp is up 2.9%, continuing to attract buyers after swinging to a profit last fiscal year and predicting more of the same this year.

And Pioneer is up 4.4% following a Nikkei news report that its in talks to sell its audiovisual-equipment business so it can focus more on car stereos.

Aussie shares are just a bit lower in early trade, with the S&P/ASX 200 down 0.2%.

The heavily weighted financials are helping drag down the index, partly a reflection of the weaker U.S. close. ANZ and NAB are down 0.4% apiece, Westpac is off 0.2%, and Macquarie is 0.3% lower.

CBA, however, is eking out a 0.1% gain amid a flurry of ratings adjustments in the wake of the lender’s earnings yesterday. Among those making ratings moves are Bell Potter (keeps buy rating), Macquarie (keeps at outperform, raises price target), UBS (hikes to neutral from sell), and J.P. Morgan (keeps at neutral, hikes price target slightly).

Meanwhile, it seems that the budget, released Tuesday night, is still impacting health-care shares. While the budget called for plans to introduce a co-pay for many medical services, Citi (according to Dow Jones Newswires) sees some question over whether the government can get the measure passed in the Senate.

Citi also see the change as less likely to affect firms such as Sonic Healthcare (currently up 0.2%) or Primary Health Care Ltd. (up 0.9%). On the other hand, Ramsay Health Care is adding to its losses with a 0.9% drop, and Sigma Pharmaceuticals is down 0.7%.

Elsewhere on the market, Sydney Airport said April passenger traffic rose 2.3%, but the market is responding with a 0.8% drop for its shares.

And Graincorp is 1% weaker after the nation’s largest public agriculture firm said its fiscal-first-half profit was 43% weaker than a year earlier.

Hong Kong stocks are stalking their sixth straight day of gains, with the Hang Seng Index up 0.7% in early moves.

A 60% surge in first-quarter profit has driven the shares of Tencent Holdings up 6.1%. The stock is trading at 109.30 Hong Kong dollars ($14.05), after a five-for-one share split (with a temporary new Hong Kong ticker of 2988).

On Wednesday, Tencent reported a net income of 6.46 billion yuan ($1.03 billion) in the first three months of this year, compared with 4 billion yuan a year ago. The result smashed a forecast 4.86 billion yuan profit from a Bloomberg survey of analysts. Tencent said that the revenue from value-added services have seen a 35% jump, thanks to fast-growing mobile games on QQ and WeChat.

Lackluster trade numbers and a slowing economy have prompted China to act again: The State Council (China’s cabinet) on Thursday announced several measures to “boost and stabilize” the country’s foreign trade situation.

“In light of the grim and complicated trade situation, arduous efforts are needed to achieve our full-year target,” the State Council said in a document on the official website of China’s central government.

Among specific actions, it said it would exempt exports of services from customs taxes, allow more two-way flexibility in the yuan’s exchange rate, expand the yuan’s use in cross-border settlement, increase financial support for trading firms and encourage commercial banks to extend credit to importers and exporters.

The State Council also urged local governments to “optimize export structure, improve the foreign-trade situation, strengthen policy supports, help trade firms increase their international competitiveness, and strengthen the government leadership.”

China’s exports fell 4.8% year-on-year in the first fourth months of this year, while imports dropped 1.2%, according to customs statistics out last week.

At the same time, China’s economy grew an annual 7.4% in the first quarter, down from 7.7% in the previous three months.

It’s been a succession of record highs for the Indian stock market lately as investors price in a clear victory for the Bharatiya Janata Party (BJP) after several exit polls earlier this week suggested it would win a clear majority in the general election.

While the BJP and its leader Narendra Modi are seen as relatively pro-business, it’s more the idea of a strong government that can tackle India’s towering economic challenges that has investors excited.

And yet, there’s a not-insignificant chance that the exit polls have it entirely wrong, and that the result from Friday’s vote count will shock the markets.

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